The inflation rate in Angola may reach 14 percent in 2015, according to a report sent to investors by the office of economic reports at Portuguese bank BPI following a visit to the country.
“Inflation may accelerate in the coming months due to the effects of devaluation of the currency, as well as due to the introduction of a new tax on consumption, with forecasts pointing to the possibility that the inflation rate may reach 14 percent before the end of the year,” said the report.
In “Brief Notes Following the Visit to Angola” BPI said that “given the context of a drop in oil prices on international markets, as well as the decline in inflows of foreign currency into the country, the National Bank of Angola gradually devaluated the national currency, recording cumulative depreciation of 30 percent from the beginning of 2015, a process that led to pressure on inflation.”
The report, drafted by analyst Luisa Felino, said the annual rate of inflation “fell considerably in the past few years”, from double digits in 2012 to less than 7 percent in June 2014, although that trend reversed when Angola’s economic situation changed.
In the document cited by Portuguese news agency Lusa, BPI analysts said that Angola’s economy remained vulnerable to developments in the oil sector, and the scenario of continued low prices was the most likely given the oversupply by the Organization of Petroleum Exporting Countries (OPEC) and the fall in demand following the economic slowdown in China.
Angola also faces the problem of declining tax revenues, with direct impact on public expenditure, a situation that “simply underlines the urgent need to accelerate the process of diversification of economic activity in a serious way,” the document said. (macauhub/AO/CN)